Lenovo has lifted the covers off a worldwide restructuring programme that includes shedding 2,500 jobs, slashing expenses and reducing executive compensation packages by up to 50%.
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As revealed yesterday, Lenovo shares were suspended from the Hong Kong stock exchange as the vendor warned that a major announcement was pending which could have implications on its share price.
Indeed it has as Lenovo stocks plunged 20% this morning on the back of the news that it plans to reduce the global workforce by 11% including management and executive positions, and it will cut support and staff expenses such as finance, HR and marketing.
Lenovo said it expects to realise savings of $300m in the 2009/ 2010 fiscal year. It also expects a pre-tax restructuring charge of around $150m.
The initiative is designed to accommodate slowing demand for PCs as it is believed that Lenovo made a material loss in the fourth quarter 2008.
In a statement the company's chairman of the board Yang Yuanqing said "our last quarter's performance did not meet our expectations."
"We are taking these actions now to ensure that in an uncertain economy, our business operates as efficiently as possible, and continues to grow in the near future," he added.
Under the new blueprint, Lenovo will consolidate the China and Asia Pacific organisations into a single business unit.
The first high-level casualty of the streamlining strategy is Scott DiValerio, senior vice president of the Americas. The business unit in that region will now report to Rory Read, senior vice president of operations.
Bill Amelio, Lenovo president and chief executive, said the actions it was taking were not easy but were necessary to compete in the current climate.